July 26, 2016 / 12:16 PM / a year ago

Freeport-McMoRan takes foot off gas on asset sales, to issue shares

(Reuters) - Freeport-McMoRan Inc (FCX.N), the world’s biggest publicly listed copper miner, put its high-profile asset sales plan on the rear burner on Tuesday, and instead unveiled a $1.5 billion share issue to help it cut debt.

An aerial view shows the site of the Grassberg Mine, operated by the U.S.-based Freeport-McMoran Copper & Gold in Indonesia's Papua province November 4, 2010. REUTERS/Muhammad Yamin

Freeport’s chief executive said he was confident the company could reduce its $18.8 billion of net debt to between $13.2 billion and $10.5 billion by the end of 2017 on the back of already executed asset sales and excess cash it expects to earn from higher mined volumes and metals prices.

As a result, Freeport, which also produces oil and other metals including gold and molybdenum, could hold on to core assets, such as the Cerro Verde copper mine in Peru. At the start of 2016, Freeport said any of its assets might be sold.

“I feel we’ve turned corner, we can see the way forward without further asset sales, without further equity sales,” CEO Richard Adkerson said on a conference call after Freeport reported a slightly bigger-than-expected quarterly loss.

However, he said Freeport was still open to considering “all strategic moves” that could generate value for shareholders, “whether that means selling assets, selling the company,” he said.

Freeport’s stock, which was down more than 7 percent at the open on news of the dilutive share issue, retraced its losses after the call. It closed 2.4 percent higher at $12.68.

Like other miners, Freeport has been hit hard in recent years by a downturn in prices for commodities, including copper, gold and oil, at a time when its debt had soared on the back of acquisitions.

But gold and oil prices have risen this year, and Adkerson said he expects copper prices to recover as well.

Phoenix-based Freeport has entered into agreements to sell more than $4 billion worth of assets this year.

Adkerson also said Freeport has assurances from the Indonesian government that it will receive the copper export permit it requires by Aug. 8. It reduced its 2016 copper output forecast from its Grasberg mine in Indonesia to 1.3 billion pounds from 1.4 billion due to varying ore grades.

Earlier on Tuesday, Freeport posted a narrower quarterly net loss of $479 million in the three months to June 30, down from $1.85 billion a year earlier.

Excluding items, it lost 2 cents per share, compared with analysts’ average estimate of a 1-cent-per-share loss.

Additional reporting by Arathy S Nair in Bengaluru; editing by Jonathan Oatis and G Crosse

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